Something pretty interesting came to my notice recently; a very pertinent question was asked by an analyst from Deutsche Bank Securities and Intel's response was supremely confident. The company's CEO believes that Kaby Lake is enough to tackle AMD's upcoming Ryzen processors - which struck me as either a very ambitious plan or an almost oblivious underestimation of its competitor.
Intel CEO not too worried about Ryzen, will tackle Summit Ridge with Kaby Lake
Before I delve into why this is so, here is the relevant extract from the transcript:
Ross C. Seymore (Deutsche Bank Securities, Inc): That's very helpful. I guess as my follow-up, you talked about the ASPs in answering a prior question. I wondered about the competitive intensity in the PC market. You're taking a more conservative tack than the third-party vendors are forecasting, but your primary x86 competitor is coming out with a new architecture for the first time in many, many years. So, I wonder whether it's on the ASP or the unit or the market share side how you're factoring that into your forecast for the year.
Brian M. Krzanich (Intel Corp): Sure. I would tell you that we always look at this environment and say there's going to be a competitive risk in the environment. And we're always focused on really, our own product roadmap and making sure that we have the highest performance product. So, when we look at 2017, we still believe that our product roadmap is truly the best ever it's been.
And as we look at the Kaby Lake and as it really ramps up through 2017, or it came out really just at the end of 2016 and now will ramp with many more SKUs and higher-performance products as we go into 2017. And then we showed at CES the first working 10-nanometer Cannonlake product, which we're still planning to ship by the end of this year and really ramp into 2018. We still believe that our roadmap and our leadership will continue to give us the performance the customers want and desire. And so that didn't necessarily factor into that more cautious forecast. That forecast was really much more a function of where we think the PC market really is overall. [Source: SeekingAlpha]
The first thing that we must keep in mind is that comparisons must occur between two similar market segments. Intel has stuck to its golden 4-core / 8-threads strategy for quite some time now in the mainstream side of things and it looks like Kaby Lake is going to be no different. Things are going to change with Cannonlake, but this is not going to happen till 2018 (the SKUs shipping this year will almost certainly be the mobility parts). Ryzen on the other hand will launch this year.
Then there is the HEDT segment of course, but on that count and from everything we have heard so far, Kaby Lake-X will remain in a quad-core form, while as Sky Lake-X will ship in 6, 8 and even 10 core variants. This is consistent with Intel's delayed-step strategy which allows it to keep high-end market spectrums one architectural revision behind while still being able to generate a decent amount of demand. In other words, the comfort of a monopoly allows Intel to keep architectures in the HEDT market 1 step behind.
So when Intel's CEO says that he will be able to compete with Ryzen using Kaby Lake, what he is essentially saying is that he expects the 4-core variants to keep pace even with AMD's 8-core offerings. Since Ryzen will undoubtedly be priced well under the $1000 mark, most probably around $500, it will be much closer to the mainstream market spectrum than the HEDT one. Not only that, but the attached costs of the Ryzen platform are significantly less!
A person aspiring to go with a Ryzen processor has to buy an AM4 motherboard, which will be much cheaper than the cost of an X299 motherboard that both Kaby Lake X and Sky Lake X will require. The combined dollar value of the Ryzen + AM4 combo puts it into the same price bracket as Intel's mainstream i7 lineup. This translates into one simple fact (competition is not just a metric of performance, it is a metric of performance per dollar - or the value proposition):
It does not matter if Intel is beating AMD SKUs clock for clock or core for core with a small margin, what matters is Ryzen potentially annihilating (I do not use this word lightly) Intel's value proposition and stopping it from being considered by tech enthusiasts on an upgrade cycle.
The logical way for Intel to handle the Ryzen threat would have been to slash prices of its existing lineup by a significant margin to bring them on par with whatever pricing AMD follows. From the CEO's comments however, about focusing on their own roadmaps and being performance leaders (and charging a premium for it), that does not seem to be the case. I risk degenerating this into an opinion editorial, but in my humble opinion, these remarks sound oddly over-confident to my ears. Ryzen, or rather its 8-core driven value proposal poses a very serious threat to Intel's dominance and it would appear that the captain of the ship is not too worried about it.
